the slow death of capitalism?

28 03 2013

Post World War II capitalism was able to afford social democracy, says duvinrouge. Profit rates were high after the capital devaluation & destruction of the Great Depression & war. Cheap oil enabled great advances in productivity. In Marxist terms the rate of exploitation increased. This means a larger percentage of the value created by workers was going to the capitalists. But because of the productivity increases, in material terms the workers were actually getting better off (at least in the West) even though they were being exploited more. This enabled the creation of a welfare state: state-funded healthcare, education, pensions & unemployment benefits. Western societies became more equal. With such improvements in living standards there was little reason for the workers to overthrow capitalism.


These improvements began to be tested in the late 1960’s. In 1967 the £ was devalued & at the same time the US$ was coming under increasing pressure, eventually leading to Nixon removing the convertibility to gold in 1971. It may be that these difficulties were based upon a falling rate of profit at the time, but even if this was just a crisis of overproduction, the authorities seemed determined to avoid a re-run of the 1930’s, particularly at the height of the Cold War with the Soviet Union. Keynesian fiscal stimulus seemed to only create inflation. The Phillips Curve gave way to stagflation. With the major currencies threatened with debasement a solution was needed. Neo-liberalised seemed to offer this. Attacking trade union power was seen as the best way to deal with the ‘enemy-within’ & perceived cost-push inflation. Alongside this came the demand to end capital controls so finance capital could overcome restrictions put in place by the now ‘independent’ ex-colonies. A new phase of multi-national globalisation directed by the bankers was beginning. This renewed power of finance capital largely came from financialisation, itself a product of the new fiat currency regime. The wider provision of mortgages & the selling off of social housing, enabled those in the West who still had work, to continue to give credence to the conservative dream of a property-owning ‘democracy’. With the fall of the Berlin Wall & the collapse of the Soviet Empire, the ‘end of history’ & the triumph of capitalism was celebrated, even China was now conceding defeat & turning to capitalism. This offered the ‘masters of the universe’ the opportunity to deindustrialised the West on an even greater scale by exploiting Chinese former peasants at even lower wages. The printing of US dollars in the form of US Treasury Bills bought by rich Arabs & the Chinese keen to keep their currency competitive, enabled the West to live on credit, buying cheap goods from Asia. How could this ever go wrong?

With an economics based upon a subjective notion of value – marginal utility – neither the Keynesians, nor the neo-liberal economists could see that value cannot be printed. With the bubble followed by a property bubble, debt ratios in the West reached record levels. The sub-prime mortgage market in the US kicked off the credit-crunch of 2007 & the outright panic of late 2008 when the collapse of Lehman Brothers threatened the whole financial system. Banks got nationalised. Banks had their bad debts bought by the government. Governments bought back their debt from the banks, long-term as well as short-term debt, & so stopped credit money from collapsing. Taxpayers are now picking up the bill in the form of ‘austerity’: cuts to government spending & a new, more intense phase of ‘rolling back the frontiers of the state’. Because of the crisis of overproduction (too much produced relative to what the market can afford to buy sustainably) capitalism can no longer even pretend to offer humanity improved living standards. Across the globe workers are suffering. Final-pension salaries are no longer ‘affordable’. Graduates are unemployed, saddled with debt & with little prospect of having the same standard of living enjoyed by their parents. Others are ‘written-off’ whilst still at school as ‘no-hopers’ & are expected to become invisible, not to riot as many did in England in the summer of 2011. The politicians’ expenses scandal in Britain has damaged the façade of so-called ‘representative democracy’. They are increasingly hated along with the bankers. The capitalist media has also taken a knock with the phone-hacking scandal & the collusion of senior police officers at London’s Metropolitan police with Rupert Murdoch’s News International has been revealed. There is little trust left.

The Great Recession is now turning into the Long Depression. Economists are bemused as to why there is no recovery. Quantative Easing has fuelled asset prices, but the real economy is seeing little investment & so anaemic growth. Not only has there not been enough deleveraging (paying off of debts) but the underlying factors that favour the production of surplus value are going the wrong way. The end of cheap energy means that the percentage of the working day’s value created by labour that can go to the capitalists in the form of surplus value, & ultimately profit, interest & rent, is under pressure as it takes more time to produce the same amount of subsistence goods to keep labourers alive & capital goods to replace depreciated capital. This means that new investment slows & capitalism struggles to grow. And it’s not just cheap energy that’s history, as other raw materials, such as rare earth minerals become scarce, prices increase & profits come under pressure. So a solution to the realisation problem, which will involve huge capital destruction, far from guarantees the resumption of good times for the capitalists. The current human-made ecological crisis, with its accompanying mass extinction of species, is testament to the limits to growth the finite world places on capitalism. Without capital accumulation, & particularly growth in labour time, capitalism has to rely upon getting profits from relative surplus value, i.e. stealing more of the workers’ labour time. But as we are seeing, under such growth constraints, the same amount of worker’s time is meaning less in material terms. The class antagonisms of labour fighting for an increased share of the value it produces just to stand still & the capitalists fighting for a greater share just to maintain the same level of profitability, is coming out into the open. The material circumstances for class struggle are very much with us & will be so for a long while yet. Already we have seen glimpses of the potential for revolution in Tahrir Square, Syntagma Square, & many places around the world that were ‘Occupied’. Politics is now catching up with the economics.

What is needed now is bold revolutionary demands. Not just new parties fighting elections with the promise of legislating the common ownership of the productive forces. But the creation of an alternative system based upon direct democracy & so equality of decision-making now. The Commune have begun the process of setting up local communes. See the list of those already in existence ( If you want help setting one up contact us. These are for all who want the common ownership of the means of production rather than the private ownership of capitalism. They are not branches of The Commune; they are totally autonomous. They are just one form of action out of many. Please get involved one way or another & help put capitalism out of its misery.

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6 responses

28 03 2013

I suppose you’ve never heard of empirical data? If you had then you’d know that profits as a proportion of national income are at their highest level since WWII. Similarly the rate of profit is at its highest level since the early 1960s. But hey who cares about facts when you’ve got a theory to peddle!

29 03 2013

Michael Roberts’ has plenty of statistics:

There’s also understanding the theory of overproduction: the credit/debt artificially supports recorded profit rates, then when the financial collapse comes profits collapse. This is why the authorities had to save the banks in 2008 by taking their losses onto the government books. The financial collapse is still to work itself out, but not just in the financial sector, also with governments going bust, or trying to save themselves by monetising the debt & generating severe inflation.

30 03 2013

Yes, the facts don’t always tell you what you think they are telling you. I guess any empiricist worth their salt needs to treat facts with a high degree of caution. Facts are nothing without context etc. As the song goes, Facts all come with points of view!

However, it would seem to me that we do not live in a period where the ruling class are struggling to create the necessary surplus value in order that they can reproduce themselves. On the contrary…

I come from the belief that crises are due, in the main, to purchases and sales in-balances, which are a natural part of capitalist dynamics. This crisis being caused by a huge disparity between actual value and real value. I.e. Bubbles bursting. More of a structural crisis than anything else.

31 03 2013

@Bill: Definitely this crisis and how it is being managed by the Capitalist elites in power (their only plan seems to be: “squeeze harder while you can”) is driving most of the remaining wealth to the top few, whose numbers and wealth are increasing while all the rest (including low tier capitalists) suffer dramatic loses.

Whatever the case, even the most mercenary bourgeois economists know that a luxury market is pretty much useless and extremely inefficient. So, even in bourgeois conceptual terms, there is a major problem, a problem that they aim to manage (not solve) with more Neoliberal dogma, while the “dissident” bourgeois economists (Keynesians) argue to no avail that the issue would be solved by, essentially, mere printing more paper-money without touching the structure of property nor sending all those bloodsuckers to the guillotine. This of course would not work, because it’s already being done to never before heard extremes (the so-called “quantitative easing”, which only gives an ever growing share of the economy to the banksters without producing almost any reactivation of the economy).

We are in a decadent financier Capitalist economical, social and political reality, in which the bourgeois regime does not have any plan nor any solution but “more of the same”. Meanwhile in the real economy, the aspect that makes a society effective, unemployment grows endlessly, small business close one after the other for lack of demand (i.e. purchasing power among common people, essentially workers), people lose their homes and even their lives to such an extreme pressure, the environment (another major victim of Capitalist greed and “perpetual growth” doctrine) continues its collapse, with major unavoidable side effects for the human sphere, economy included, of course, etc.

And there is no plan: the Capitalist elites who continue as managers everywhere in spite of all can only think: squeeze them even more, they are too “entitled”, IMF doctrine to the “rescue” (we know how that works out, don’t we?), etc. No realistic plan at all.

So the forecast is a persistent crisis or rather depression, with accumulative bouts of greater collapse and, at best, minor and rather localized and sluggish periods of some “growth”. In the end this has only one solution, which is Socialism or Communism, without any concessions to the already exhausted Capitalist model.

As I have said of Greece several times but actually applies everywhere, the crossroads we are at allows for two directions: to Haiti and to Cuba (so to say).

Of course, such a radical change won’t happen easily but there’s no realistic alternative, unless we totally despair of all Humanist values and accept (what I will not) that Humankind cannot do any better than a regime of slavery, misery, terror and environmental destruction… until extinction arrives.

31 03 2013

Hi Duvinrouge! Thanks for the article. I think my latest one entitled ‘Daylight Robbery in Cyprus’ at agrees with your main points. For it suggests this so-called Cyprus ‘bailout’ – along with the growing crisis of some US cities – marks yet another self-destructive stage – in what you describe as the ‘slow death of the capitalist mode of production. And suggests some anti-cappitalist implications. Regards, Roy

1 04 2013

Roy, I like your article. The need to explain that the Soviet Union, or any other one-party dictatorship was not communism & the need to move on from hierarchical, Bolshevik ‘solutions’ is very much ‘part & parcel’ of our approach at the Commune.


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